According to a study conducted by National Bureau of Economic Research, employers cheated workers out of $4 billion in overtime wages by misclassifying them as mangers. Under the Fair Labor Standards Act, employees classified as managers earn at least $35,568 annually and have managerial duties. (Important note: under the New York Labor Law you must receive a salary of at least $58,500 if working in New York City or $51,480 if working in New York State to be exempt from the overtime requirement). Managers don’t receive overtime wages when working more than 40 hours a week. Generally, managerial duties include managing staff, running a department, and having the authority to hire and fire staff. In contrast, employees classified as hourly employees must earn at least minimum wage and receive overtime wages when working more than 40 hours a week. Generally, hourly employees’ work duties include stacking shelves, registering sales on a cash register, and unpacking merchandise.
Researchers at the National Bureau of Economic Research discovered an increased appointment of so-called managers who earn just above the minimum annual salary required to be classified as exempt from the requirement of overtime pay. Researchers found that employers classify hourly employees as managers by giving them fancy-sounding job titles, but still assign these “managers” the same work duties as hourly employees. Doing so allows employers to avoid paying such employees overtime when working more than 40 hours a week. For example, employers are giving booking clerks who are traditionally hourly employees the job title of “Lead Reservationists” so that they can be classified as managers and not be paid for overtime. Other examples include employers giving restaurant hosts the title of “Guest Experience Leaders” or barbers being titled “Grooming Managers.” This tactic used by employers has led employees to lose out on an average of 13.5% of their annual salary.
The misclassification of workers as managers is a common unlawful practice. For example, in 2020, Panera Bread was ordered to pay $4.6 million in unpaid overtime wages to more than 900 Ohio staffers who were classified as Assistant Managers. Similarly, Burlington agreed to pay nearly $20 million to employees who were misclassified as Assistant Managers. In 2019, Wawa paid $1.4 million to employees who were misclassified as Assistant Managers. Additionally, workers filed a class action against Speedway for misclassing them as General Managers. In 2008, Family Dollar was ordered to pay $35 million in unpaid overtime wages to staffers who were classified as “store managers” but worked as many as 90 hours stacking shelves, unloading trucks, and doing various non-managerial tasks.
If you believe you have been misclassified as a manager, please contact Pechman Law Group at 212-583-9500 to schedule a consultation with one of our attorneys.